Annual Compliance of Private Limited Company

Annual Compliance of Private Limited Company

Annual compliance refers to the legal and regulatory obligations that a Private Limited Company must fulfill on an annual basis as per the Companies Act, 2013 and other applicable laws. These compliances ensure that the company operates within the legal framework and maintains transparency.

Benefits of Annual Compliance:

• Legal Protection: Ensures the company adheres to the law and avoids penalties.
• Transparency: Builds trust with investors, shareholders, and stakeholders.
• Smooth Operations: Regular compliance avoids disruptions and fines that may affect the company’s operations.
• Credibility: Enhances the company’s reputation and credibility in the business community.

Annual Compliance Requirements:

1. Filing Annual Return and Financial Statements:
   • Form MGT-7 (Annual Return) must be filed with the Registrar of Companies (RoC).
   • Form AOC-4 (Financial Statements) must be filed, including the Balance Sheet, Profit & Loss Statement, and Cash Flow Statement.
   • Deadline: Both forms must be filed within 30 days from the date of the Annual General Meeting (AGM).
2. Holding Annual General Meeting (AGM):
   • The company must conduct an AGM once every year to discuss financial statements, dividends, and other important matters.
   • Deadline: The first AGM must be held within 9 months from the end of the first financial year, and subsequent AGMs must be held within 6 months from the end of each financial year.
3. Statutory Audit:
   • A company must appoint an auditor in its first AGM and have the financial statements audited by a qualified auditor.
   • The auditor’s report must be submitted along with the financial statements to the RoC.
4. Director’s Report:
   • The Director’s Report must be prepared and presented to the shareholders at the AGM. It includes details about company operations, financial performance, and future plans.
5. Income Tax Filing:
   • The company must file its Income Tax Return (ITR) annually with the Income Tax Department.
   • Deadline: Typically, the tax return is due by September 30th for the previous financial year.
6. Board Meetings:
   • At least two board meetings must be held each year, with a gap of at least 90 days between them.
   • The minutes of the board meetings must be maintained and signed by the directors.
7. Compliance with GST:
   • If the company is registered under GST, it must file regular GST Returns (monthly/quarterly).
   • Deadline: Varies based on the company’s GST registration and turnover.
8. Maintaining Statutory Registers:
   • The company must maintain statutory registers, such as the Register of Members, Register of Directors, Register of Shareholders, and Register of Charges.

Documents Required for Annual Compliance:

1. Financial Statements (Balance Sheet, Profit & Loss Account, Cash Flow Statement).
2. Board Resolution for appointment of auditors and approval of accounts.
3. Director’s Report.
4. Form AOC-4 and Form MGT-7 (Annual Return).
5. Income Tax Return (ITR) of the company.
6. Statutory Registers (Register of Directors, Register of Shareholders).

Penalties for Non-Compliance:

1. Late Filing Fees:
   Failing to file the Annual Return (Form MGT-7) or Financial Statements (Form AOC-4) within the due date results in penalties, which can increase with delay.
2. Fines:
   Non-compliance with AGM or statutory audit requirements may result in fines or penalties for the company and its officers.
3. Director Disqualification:
   Directors may be disqualified from acting as directors if the company fails to meet its compliance obligations.
4. Striking Off the Company:
   Continuous non-compliance can result in the striking off of the company from the Registrar of Companies.